London pre-open: Stocks seen lower as bond sell off resumes
London stocks were set to fall at the open on Thursday as the selloff in bond markets resumes.
The FTSE 100 was called to open 63 points lower at 6,612, with a raft of corporate news for investors to sink their teeth into.
Ipek Ozkardeskaya, senior analyst at Swissquote, said: "Investors are dumping their sovereign bond holdings yet again on rising inflation fears that hit the highest levels since 2008. And the Federal Reserve (Fed) Chair Jerome Powell will unlikely stop the bleeding at his speech at a Wall Street Journal Event today.
"Saying that the aggressive bond selloff is due to a growing optimism, or the recent chip shortage didn’t work at his testimony before the Senate, it won’t work today either.
"On the other hand, the jobs market is, as he says, not in a position that would allow the Fed to tighten its monetary policy. As such, the Fed is faced with a difficult problem. It will either act to improve employment and let the inflation run hot. Or it will act on inflation and leave 10 million jobless Americans hopeless along with a more restrictive government check policy. The answer is simple: we will need to learn how to live with rising inflation fears, and perhaps with higher inflation for some time."
On the data front, investors will eye Markit’s construction PMI for February at 0930 GMT.
In corporate news, Aviva posted annual profit was little changed as the insurer announced the disposal of its Italian business and a move to reduce debt by £800m.
Adjusted operating profit for the year to the end of December dipped 1% to £3.16bn as profit from core markets fell 3% to £2.5bn. The FTSE 100 insurer proposed a final dividend of 14p a share, taking the annual payout to 21p a share compared with 15.5p a share in 2019.
Aviva sold its remaining Italian life and general insurance businesses for €873m in cash to CNP Assurances and Allianz. It also announced plans to buy £800m of notes to reduce debt.
Housebuilder Vistry reported better-than-expected annual profits and resumed dividend payments driven by a strong second half performance.
Adjusted pre-tax profits came in at £143.9m, ahead of Vistry’s expected range, and down 23.5% year on year. A final dividend of 20p a share was declared. The company said it was positioned to more than double adjusted profit before tax in 2021 to at least £310m "assuming stable market conditions".